TFM Sunrise Update 7-8-20


Corn futures are lower this morning as a sizable rain event makes its way across the northern portion of the central U.S.  More on the updated weather forecasts in the soybean comments.  Dec corn was down 5 cents overnight to a one-week low of 3.47-1/2 and back below the contract’s 100-day moving average.   Weather permitting, this may embolden the funds to re-establish short positions.  The player sheet had Managed Money net sellers of 10,000 corn contracts yesterday bringing the net holding to an estimated 183,000 sold contracts.  Weekly Ethanol Stats will be out today, Exports tomorrow morning followed by Friday’s USDA supply and demand report.  Expectations are for a continued heavy supply picture.  Forecasts stay on the front burner of market focus with above average temperatures through the month of July.   The key will be precipitation and the area of coverage to avoid heat stress heading into pollination.


Soybean futures were down as much as 7 cents overnight and look to be topping out for the week ahead of the USDA report on Friday.  Last evening’s GFS model run showed significant rainfall again in the Corn Belt in the second week of the outlook; However, it was notably wetter in the southern half of the region and drier in the northern half compared to the midday run.  The midday European Model run (ECMWF) was also wetter in the second week compared to the previous run for the Corn Belt.  Both models indicate strong ridging bringing limited rainfall and above average temps to the Plains and Midwest in the 11 to 16 day forecast.   The bean complex has entered overbought territory and the key will be weather in August.  However, a good base needs to be built in July for top production in August.  Soybean meal and oil were also softer overnight.


Wheat futures were firm overnight with most contracts seeing 2 to 3 cent gains amid a weakening dollar.  However, the technical view of the market is lower as global supplies limit rallies.  Prices have been in consolidation mode, looking for direction.  Ongoing winter wheat harvest and improved spring wheat crop conditions also limit near-term rallies.  In tender activity, Egypt bought 230,000 tons of Russian wheat; Jordan bought 60,000 tons of option-origin wheat; Thailand seeks 193,000 tons of option-origin feed wheat.


Live cattle futures are called steady to higher.  Cash trade is still developing this week, but early indications are steady to slightly higher being led by stronger futures prices…August live cattle are trying to maintain a premium to the cash market.  The market appears optimistic over retail demand.  With retail values at 2017 lows, retailers will be looking to feature more beef production.  Open interest is growing which is supportive.


Lean hog futures are called mixed.  The heavy fundamental supply of market hogs make price rallies difficult as hog prices trying to build a short term low.  Tuesday afternoon retail weakness featured carcasses down 1.74 to 62,60 thus keeping pressure on the front months.  August continues to hold a premium to cash and export news remains strong, so look for two-sided trade today.


Matthew Strelow

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